Bad News for Estate Agents in SA

Tough Times for Estate Agents

An article published on the Business Report website has indicated that the severe slowdown in residential property sales is leading to a number of estate agents leaving the industry and the worst is yet to come, say industry players.

The principal of the Seeff Properties office in Centurion, Steve van Wyk said last week that where his office had 53 agents a year ago, there are now just 42. “I think that the numbers will reduce further, particularly over the course of this year,” he said.

Van Wyk added that the Property Trader, which many estate agencies use to market houses for sale, has shrunk from 130 pages last year to about 80 pages this year. This, he attributed to the fact that many of the smaller estate agencies are closing and the bigger agencies are cutting back on marketing outlay, in a bid to see themselves through the “tough times”.

Managing director of Seeff Pretoria East region, Gerhard van der Linde reported that the number of his agents has remained stable, but that agents from smaller agencies are “gravitating towards the brands and companies”.

Andrew Golding, chief executive of Pam Golding Property, said that his company had “not yet” experienced a decline in the company’s number of agents, but added that it was still too early to know how bad it was going to get for the more marginal agents.

When it comes to the decline in the volume of house sales this year, Seeff Properties estimated a drop of about 35%, while Pam Golding Properties indicated that volumes were down about 30% over the past two years.

Both companies rejected claims made by the Estate Agency Affairs Board (EAAB) that 26 000 of the 82 000 estate agents who were licensed last year had not renewed their licenses this year.

Chief executive of the EAAB, Nomonde Mapetla said that the reduction was most likely due to the slowdown in the property market because of the series of interest rate hikes over the last two years, as well as the implementation of the National Credit Act in June last year.

Van Wyk argued that in February this year, 29 of his agents had not yet received their fidelity fund certificates, despite having paid in full. “I know, I have proof of payment,” said van Wyk. “I spent two hours at the EAAB’s office going through it with them. I gave them a copy of the agent’s identity document and the proof of payment, but [we] are still sitting with nine agents without certificates”.

In order to practice legally and to earn commission on sales, estate agents must all have a fidelity fund certificate issued by the EAAB. Once new training requirements for agents are implemented, van Wyk believes that there will be between 15 000 and 20 000 left operating in the country. These new compulsory qualifications will essentially be a barrier to entry into the property industry, with prospective agents expected to attend formal training courses for a year and passing a sequence of exams.

Golding is fully in support of the new training requirements, but believes that the implementation of such a new curriculum in the industry will cause chaos, unless it is well thought out. His Property Group is preparing to have its 2000 agents fully accredited within the next five years, but the threat has come from the lack of clarity about requirements and the lack of confidence in the new system, according to Golding.

He asks, “Are there enough assessors and are the procedures robust enough for example, on the recognition of prior learning?”

The information in this article is courtesy of Roy Cokayne (“Property industry faces tougher times”, Business Report, 19 May 2008).

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